skrealestate8 0 Report post Posted September 9, 2011 Hi:I am always stumbling with this question and it seems to come up to frequently. How do you explain to the seller that you are going to be taking all/part of their option money and at the same time tell them that you do not charge them a fee for your/our services. Obviously the option amount will be listed on the agreements and HUD. Does'nt that create a problem when they find out sooner or later that you are getting your/our fees from what that look at as their money? Share this post Link to post Share on other sites
Dmcdonald 0 Report post Posted September 9, 2011 Hi:I am always stumbling with this question and it seems to come up to frequently. How do you explain to the seller that you are going to be taking all/part of their option money and at the same time tell them that you do not charge them a fee for your/our services. Obviously the option amount will be listed on the agreements and HUD. Does'nt that create a problem when they find out sooner or later that you are getting your/our fees from what that look at as their money? I'm going to take a stab at this, although I'm sure someone will come up behind me with a more cohesive answer... The best way I've heard is to simply tell the seller that the tenant/buyer pays your fee when they close on the property. If the seller is angry at the idea that you're making some money, they are not truly motivated! Point to the net price that they requested and say that you will be getting them that much and how much you make from the T/B does not affect that price. Share this post Link to post Share on other sites
MichaelC 160 Report post Posted September 9, 2011 How do you explain to the seller that you are going to be taking all/part of their option money and at the same time tell them that you do not charge them a fee for your/our services.First, stop thinking of it as their money. It's yours, you're a professional, and you shouldn't be expected to work for free. A better question would be for the homeowner to ask their Agent why they are keeping their money. 6%! Now that's something worth questioning. Does'nt that create a problem when they find out sooner or later that you are getting your/our fees from what that look at as their money? They will know long before closing. It's noted on the CA Assignment Agreement they are required to sign when the deal with the t/b is reached. Your job is to have the homeowner focus on the net purchase price at closing. That's the big advantage you are offering. Assuming they don't need to cash out immediately and they are truly motivated, that should be their concern, not how much money you are making. Share this post Link to post Share on other sites
pilot76180 51 Report post Posted September 9, 2011 I tell them that our clients pay our fee, but what we LIKE to do, if we can is the opposite of a REaltor, in that we RAISE the price by what we are retaining. An Agent will tell you to drop the price and drop the price, but they still get their 6% cut, we go the opposite direction and RAISE the price, if we can, so although it comes off the price, you as the seller end up right back where you were, and you didn't have to pay a commission! 1 Share this post Link to post Share on other sites
skrealestate8 0 Report post Posted September 10, 2011 Thank you all for your valuable reply to my question! I am now less fuzzy about answering the question of where I get my fee. The sellers I talked to do not take issue with me making a honest buck. They just want to know where I get the money, i.e is it comming out of their pockets/profits. And if it is how much will it cost them. My second question is, is it a fair statement to tell the seller that they do no pay any fees for our/my services? I like to be upfront with people so there are no surprises. If the money is comming from the option consideration, why not just tell the seller that upfront that way they can decide if they want to deal or walk away. I really appreciate as much input and views on this as possible. THANK YOU ALL! Share this post Link to post Share on other sites
MichaelC 160 Report post Posted September 11, 2011 Again, you need to direct the homeowner's attention to their net sale price. As pilot said above, we add the option money to that figure so it isn't coming out of the homeowner's bottom line. Share this post Link to post Share on other sites
skrealestate8 0 Report post Posted September 11, 2011 Again, you need to direct the homeowner's attention to their net sale price. As pilot said above, we add the option money to that figure so it isn't coming out of the homeowner's bottom line. "By George I think I got it" Thanks Michael and everyone who contributed to helping me understand! Share this post Link to post Share on other sites
BTI 7 Report post Posted September 12, 2011 Again, you need to direct the homeowner's attention to their net sale price. As pilot said above, we add the option money to that figure so it isn't coming out of the homeowner's bottom line. "By George I think I got it" Thanks Michael and everyone who contributed to helping me understand! Still hate unlicensed people using the word fee, I can use it because I'm a broker but when I act as a investor I avoid it and some day in some state it might come back to bite you. Nothing wrong with using the word profit, or I get make my profit in this transaction by the amount the t/b pays me to take over my portion of our transaction. Again do not give t/b down payment credit for option money because by case law when you do that your make it refundable earnest money, and if I were a young lawyer I could make a nice living getting earnest money refunds from CA participants, give it to them thru the lease and rent credits. Now that I think about it maybe I should be selling all those CA leads to a young lawyer since most t/b's don't buy and there is a ton of option money sitting out there that is refundable and the statute of limitations hasn't expired on it yet, and you and the owner can get together for lunch before your court appearance and decide how you want to split the judgment. Thank god t/b's don't have a clue of what they are due. Share this post Link to post Share on other sites
moveright 0 Report post Posted September 23, 2011 The best way I've heard is to simply tell the seller that the tenant/buyer pays your fee when they close on the property. Correct me if I'm wrong(and there's a high chance of that lol) but, this is actually not true in a CA. We get paid up front. That's one of my big hang ups actually, because if you think about it, a seller has to really want to do business with you because you get paid right out of the gate, then you're out of it. What's to keep you caring that you are actually making good deals? ( I mean, I'm a moral person so I care, but from a sellers stand point) Share this post Link to post Share on other sites
<Steve> 82 Report post Posted September 23, 2011 Michael- That is exactly right. This is what will define how long someone will last in this business. I will say now with the winter months ahead, sellers tend to slow in my market, last winter 75% of my business was repeat CAs and referrals from sellers I worked with in the past. Go the extra mile and you will reap the rewards. I think that is true with any business. Share this post Link to post Share on other sites
MichaelC 160 Report post Posted September 24, 2011 What's to keep you caring that you are actually making good deals?Like Steve said, reputation and word of mouth will determine how long you last. Besides, the homeowner makes the call on who moves into their house. You're not sticking in any deadbeat and running off with the money. Share this post Link to post Share on other sites
Jonathan RexfordFL 8 Report post Posted September 26, 2011 Good grief.....UNLESS YOU ARE A REALTOR....STOP USING THE WORD FEE!!! A realtor gets paid for providing a seller and buyer. You are not doing that. Remember that when you option a property you have a contractural right to do with it what ever the terms of your agreement states. If you choose to assign your contract to release you from the agreement, then the assignee pays for that right. If you choose to do a sublease agreement. Then you have that right. When explaining it to the seller. Leave the word FEE and also leave that the BUYER pays my FEE....again. If you are a realtor, then it is ok. Fee/Commission is used too much together. When I was retailing options, I sold my right of the agreement, by releasing my position to buy. Was it a FEE....no. It was an agreement. Maybe I am just tired. But this just gets my gaull.....Yes I am a realtor and I do take a fee. But when there is more meat on the bone, I take my RIGHT in the position that I am selling. Also the other statement about Their Money is dead on. It is NOT. They did not work for it......you did. HTH Share this post Link to post Share on other sites
<Steve> 82 Report post Posted September 26, 2011 You real estate agents and your !@#$% words! The assignment fee is considered option consideration your honor. Share this post Link to post Share on other sites
Jonathan RexfordFL 8 Report post Posted September 26, 2011 You real estate agents and your !@#$% words! The assignment fee is considered option consideration your honor. Boy, I would love to hear the argument of Assignment "FEE" to be used as option consideration. Assignment fee, is a stand alone contractural agreement. Not consideration. It is a purchase of rights. But, then again...maybe it is just the REALTOR in me that likes to play with words.....lol. I for one am on your side. I have seen licensed and unlicensed people hurt while crossing the lines. Share this post Link to post Share on other sites
<Steve> 82 Report post Posted September 26, 2011 LOL just pick'n at you JR. You are right. The reality is we need to be careful with the words we use and what they represent. To often I think it is forgotten or not realized that or rights in the deal is what's being sold. As investors we are not servicing clients. That's a no no. Share this post Link to post Share on other sites
